On Tuesday, August 16th, before the market opens, Walmart (NYSE:WMT) plans to release its financial results for the second quarter.
This will be the company’s first earnings report since the first-quarter results in May sent shares tumbling due to inflated inventory levels. In the weeks following the report, the Arkansas-based retail giant warned that earnings would decline in the second half of 2022 due to inflationary concerns.
According to Walmart’s (NYSE:WMT) most recent earnings report, the company expects its operating margin for the second quarter to be about 4.2% and same-store sales in the United States, excluding gasoline, to rise by around 6%. The predicted increase in consolidated net sales for Q2 is 7.5%, whereas the expected decrease in adjusted EPS for Q2 is about 8% to 9%.
Current projections are for $1.60 in earnings per share (EPS) (-10.1% Y/Y) on $149.96 billion in sales (+6.4% Y/Y). There have been 27 negative adjustments to analysts’ EPS predictions for Walmart over the last three months, while there have been 16 upward revisions and 1 downward revision to revenue expectations.
Walmart’s Stock
Walmart’s (NYSE:WMT) stock has declined by 8.20% in the past year. Since May, shares of the retailer and its rivals have fallen, but they have begun to rebound. However, Morgan Stanley has cautioned that this uptick may be temporary since negative news is expected to persist through the second half of 2022.
However, Morgan Stanley analyst Simeon Gutman predicts more negative guidance revisions for the sector in general during earnings week, so the retailer was still cited as preferable to Target (TGT) ahead of earnings due to its better mix of non-discretionary categories and more significant grocery market share, it may not remain so after the earnings report.
Similarly, Gutman thinks Walmart’s stock and profit margin problems are temporary. By year’s end, most of the company’s inventory will have been sold or cleared out.
Walmart has joined the ranks of other shops, including Best Buy (BBY), 7-11 parent Seven and I Holdings (OTCPK:SVNDY), and shoe stores Rocky Brands (RCKY) and Allbirds in laying off employees in recent weeks to save money (BIRD).
The Q2 report, according to Gutman, will indicate increased penetration in homes with higher incomes, and the food, auto parts, and pet categories should all experience significant increases.
Walmart (NYSE:WMT) has outperformed earnings per share predictions 75% over the last two years and sales projections 100% of the time.
Featured Image: Megapixl @Cacrov
Author Shariq Khan 
